Private agencies diverting millions

Troy Anderson

Daily News of Los Angeles

December 7, 2003

Since 1998, county auditors have found more than $9 million in unallowable or questionable expenses by the private foster-care agencies that have contracts with Los Angeles County.

The audits revealed taxpayer funds were used to pay off Las Vegas gambling debts, call psychic hotlines and pay for jewelry, parties, lottery tickets, alcohol, vacations, antiques, artwork and even a cremation.

"They have abused both children and taxpayers," said Jon Coupal, president of the Howard Jarvis Taxpayers Association. "Particularly in these tough economic times, the fact that money is being misspent this way is absolutely appalling. Local governments are screaming for more revenues, yet they are grossly misspending these funds, frittering away this money without any accountability at all."

Supervisor Michael D. Antonovich said the county should be reimbursed for those misappropriated funds.

"There is no excuse for using money intended for foster children to cremate one's father-in-law or to use those funds at Victoria's Secret," he said.

Some of the executives of the private foster care agencies that oversee the children receive up to $310,000 a year in salaries and benefits, enjoy extravagant lifestyles and drive luxury cars provided to them at public expense, the county audits reveal.

Some directors of foster-family agencies and group homes drive around in head-turning vehicles - Jaguars, a Land Rover, a Cadillac Escalade SUV, Mercedes and Lexus - provided to them at public expense, according to the audits.

One official billed the taxpayers more than $12,000 for membership dues and a banquet party at the Beverly Hills Country Club.

"I think it suggests Los Angeles County is a national scandal," said Richard Wexler, an author, former university professor and executive director of the National Coalition For Child Protection Reform in Alexandria, Va. "There are lots of troubled foster care systems in the United States. But Los Angeles County is always on people's lists."

Department of Children and Family Services Director David Sanders, who earns $175,000 a year and is among the nation's highest-paid public child welfare agency directors, said taxpayer dollars should be spent ensuring the safety of children.

"When we have that kind of credibility issue, it's little wonder people can raise questions about our ability to get the work done," said Sanders, who took over the department in March. Since 1985, the four previous DCFS directors have resigned under pressure from top county officials.

As private foster care agencies made millions of dollars off the children under their care, critics say the Board of Supervisors looked the other way. From 1995 to 2002, foster family agencies, group homes and others spent more than $262,000 lobbying and making campaign contributions to the supervisors, including more than $67,000 in campaign contributions.

"I think it's clear that foster care has become an industry in some parts of Los Angeles County," said child advocate Nancy Daly Riordan, founder of United Friends of Children and wife of former Los Angeles Mayor Richard Riordan. "There is definitely a financial incentive to keep kids in foster homes way beyond what is necessary."

MISUSED FUNDS

The group homes and foster family agencies that care for most of Los Angeles County's foster children have misused more than $9 million in taxpayer funds since 1998, paying off debts at Las Vegas casinos, buying lingerie and even paying for the cremation of an executive's father-in-law, county audits reveal.

Based on the audits, the Department of Children and Family Services reviewed $6 million of the unallowable and questionable costs from March 1998 to May 2001 and required the agencies to pay back $1.5 million. So far, the department has received about $600,000.

Here are examples of the disallowed spending:

• Group home directors paid $4,500 in debts at two Las Vegas casinos and spent $54,472 on lease payments for a luxury home.
• Foster family agency directors bought $1,814 worth of lingerie and racked up $6,113 on 116 restaurant meals, even sticking taxpayers with the tab for their alcoholic beverages.
• An agency director spent $774 to cremate his father-in-law.
• Officials spent $12,247 for a membership at the Beverly Hills Country Club and a $6,013 banquet party for 150 employees.
• Agency officials spent $57,379 on legal fees and to settle sexual harassment lawsuits by three former employees.
• Directors purchased or leased two Jaguars, a Range Rover, Mercedes, Lexus, Ford Expedition, GMC Suburban SUV and a Cadillac Escalade SUV, which cost $1,083 a month to lease.
• An official made $4,715 in credit card charges for various unidentified items during trips to the Czech Republic, Great Britain and Panama, and $989 in purchases made in Las Vegas at the MGM Grand Hotel, Luxor and Rio hotels.
• Auditors found agency executives purchased $3,800 worth of pantyhose, razors, suits, shoes, pet supplies and jewelry and beauty supplies in Las Vegas.
• Officials billed the county $2,950 a month for a child who had left the facility four years before, collecting a total of $35,400.
• Payments for a president's 1998 Land Rover and credit card charges for trips to London and New Orleans.
• The audits showed the agencies seemingly missed no opportunity to bill the taxpayers for personal items, no matter how trifling. One audit noted $152 was spent on cigarettes, liquor, pet food and a church donation.